I've just recently heard of this type of investment. I'm Canadian, and there is no such thing here.
A company has recently sprung up in my area that sells U.S. policies. I've done some research and the returns as well as the basics of the investment look good. The problem is that there seem to be some scammers out there. Is it really that bad? Often you hear more about the 1% that got screwed over than the 99% who are happy customers.
I'd like to hear from anyone with opinions or experiences with this type of investment.
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If the guy takes too long to die, you lose. It seems similar to to buying a tax lien. You only make money when the property sells. There is a piece of property in Bellingham that lay partially completed for 100 years.
I prefer lottery tickets.
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I have some speculative swamp land for sale... as a beach front an investment. If you prefer drier inland climate, I also have some desert property for sale.
You buy through a broker an existing life insurance policy from a terminally ill owner at a discounted price. Viatical is from the latin word viaticum meaning provisions for a journey. The ill person gets needed money to live on before he or she dies.
There are morality issues with betting on when a person will die as well as practical issues. Also, you are vulnerable to any fraud by the insured which causes the insurance company not to pay.
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Viaticals became "popular" back when AIDS was still relatively untreatable. But, then several drugs were developed and people no longer were dying as rapidly as before.
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Quote:
Originally Posted by Martha
Also, you are vulnerable to any fraud by the insured which causes the insurance company not to pay.
Very good point. In a case like this, I don't suppose that the owner of the viatical policy would make a very sympathetic plaintiff either.
Ha
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You also have to deal with increasing regulatory scrutiny of this market. "Stranger-owmed life insurance" in all its forms is growing quickly, and this is drawing the attention of insurance regulators, consumer protection regulators, securities regulators and tax authorities.
I would pass unless you can invest enough to hire someone sharp to help you (actuary with fixed income/financial experience might do it).
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In addition to what Brewer says, you also have to be comfortable with the idea that the sooner the insured dies the higher your return.
To me that's just asking for bad karma.
I'm a believer in karma as well, but I'm at peace with it since the way I see it, if nobody bought these policies then lots of people couldn't afford to pay medical bills or do the things that they always wanted to do before they died.
If someone is selling something, it's probably a security, and hence it's probably regulated by someone. Or the people selling it are probably regulated by someone. In Canada, try calling your territory's securities commission.
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since the way I see it, if nobody bought these policies then lots of people couldn't afford to pay medical bills or do the things that they always wanted to do before they died.
That's a good sales pitch, but doesn't mean that it's a good investment.
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Quote:
Originally Posted by ats5g
That's a good sales pitch, but doesn't mean that it's a good investment.
- Alec
Actually, life settlements can be a good investment. But you have to be a big enough, sophisticated enough investor to make it work. If you are small and retail, you run the risk of being picked off or defrauded.
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"To be a man means that you are brave, loyal and true. When you are in the wrong, you own up and take your punishment. You don't take advantage of women. As a husband, you support and protect your wife and children. You are gracious in victory and a good sport in defeat. Your word is your bond. Your handshake is as good as your word... When the ship goes down, you put the women and children into the lifeboats and wave good-bye with a smile." C Murray
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